Bombay High Court Grants Interim Stay on 18% GST for Hotel-Based Restaurants

Bombay High Court Grants Interim Stay on 18% GST for Hotel-Based Restaurants

The Bombay High Court has granted an interim stay on the retrospective levy and collection of 18% Goods and Services Tax (GST) on restaurants located within hotels.

Key Details of the Stay Order

• Levy Challenged: The interim relief targets the retrospective application of the 18% GST rate on restaurant services operating within hotels, specifically those where the room tariff exceeded a certain threshold (historically ₹7,500).
• Controversial History: The tax rate applicable to hotel-based restaurants has been subject to frequent changes under the GST regime. This petition challenges the tax authorities’ attempt to apply the higher 18% rate retrospectively, often demanding tax for past periods when the applicable rate or rule was ambiguous.
• Relief Granted: By granting an interim stay, the High Court has prevented the tax authorities from taking coercive action against the petitioners (hotel and restaurant owners) for the recovery of the disputed tax demand until the final disposal of the petition.
• Significance: This provides immediate financial relief and legal protection to the hospitality industry, particularly in Mumbai and other parts of Maharashtra, safeguarding them from large, unbudgeted retrospective tax demands.